Best mortgage deals for buy-to-let investors

Buy-to-let investors tend to get mortgages on an interest only basis, though capital repayment options are also available.

Our roundup of the best deals, below, is based on someone borrowing on an interest-only basis against a £250,000-property for 20 years, though you can compare other property prices, repayment periods and loan-to-value (LTV) ratios at moneywise.co.uk/compare.

Our buyer is paying fees up-front. 

75% LTV

Virgin Money has one of the best fixed-rate deals for buy to let investors, charging 2.04% until April 2019. With a £1,709 initial fee and monthly repayments of £319 our buyer will pay £9,365 over the first two years. After the fixed-rate period, the standard variable rate (SVR) of 4.54% kicks in and means repayments will rise to £709, though that might change.

Alternatively, Platform has a 2.24% fixed-rate deal until January 2019, which will cost £350 each month with a £1033 up-front fee. Over the first two years our buyer will pay £9,433. When the SVR comes into play (5.50% variable) payments will increase to £859 per month assuming the rate doesn’t change in the meantime.

If you’re willing to take your chances with a variable rate mortgage then Platform will charge 1.64% over the base rate for two years. However, there’s a floor price on this deal, so the rate will never fall below 2.14%. This effectively means borrowers won’t see any benefit if the rate falls further, but on the other hand, they won’t pay more if the base rate returns to 0.5% either.

This mortgage will cost £334 per month in our example scenario. Including the £1,033 initial fee our buyer will have paid £9,049 after two years. After two years the 5.5% SVR (variable) will push rates to £793.

60% LTV

Deals are slightly more attractive with a 40% deposit, with rates available for well under 2%, though you’ll need to remember to factor in the up-front fees.

Platform lends at 1.79%, fixed until January 2019, meaning it’ll cost £224 per month to borrow £150,000. However, borrowers will need to pay £1,033 in up-front fees, so the cost over two years is £6,409. The SVR is relatively high at 5.54% SVR, meaning repayments will almost triple so it’s vital to make a note to remortgage.

Among the top variable rate deals, again Platform comes out on top. It will lend at 1.69% (1.19% over the base rate), involving repayments of £211 per month with a £1,033 up-front fee. That’ll cost £6,097 after two years, when the 5.00% SVR will kick in. That’ll push payments to £625, assuming the rate doesn’t change.